Resolute Energy Corp. (NYSE: REN) announced Dec. 31 it entered into agreements for a $150 million second lien secured term loan with Highbridge Principal Strategies and has also amended its senior revolving credit facility.
Net proceeds from the second lien facility loan are anticipated to be about $134 million after payment of transaction-related fees, expenses and discounts.
Proceeds will be used to repay outstanding borrowings under its senior revolving credit facility. The new second lien term loan has materially enhanced the company's current liquidity position.
Nicholas J. Sutton, Resolute's CEO, said in a statement, "This new second lien secured term loan provides Resolute with significantly enhanced liquidity and capital resources. Following closing, the company has total borrowing base availability of approximately $92 million. As a result, the company has much greater financial strength to withstand the current low commodity price environment and, as oil prices rebound, the flexibility to execute on drilling programs in the Permian and Powder River basins.
"With this financing in place, Resolute's management team is preparing its capital and operating plan for calendar year 2015. We expect to provide production and other guidance to the market in January.
"We are delighted to welcome Highbridge Principal Strategies as a strong and knowledgeable financial partner, and look forward to working with them to continue Resolute's success."
BMO Capital Markets was sole arranger for the second lien facility.
The company's second lien facility matures no later than November 2019 and permits Resolute to issue up to $200 million of additional second lien debt for 60 days following the initial closing. In connection with the second lien financing transaction, the company also amended its senior revolving credit facility. The initial conforming borrowing base under the amended senior revolving credit facility was set at $330 million and certain other amendments were made, including eliminating the total debt-to-EBITDA covenant and conforming the covenant package in the senior revolving credit facility to that of the new second lien facility.
Funding of the amounts under the second lien facility is expected to occur later Dec. 31.
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